Senior writer

SOPHISTICATED data-mining techniques combined with old-fashioned private detectives and dobbing in wrongdoers are resulting in fewer people being prosecuted for welfare fraud and allowing the federal government to claw back hundreds of millions of dollars.

But, according to a report to be released on Tuesday, the idea of prevention being better than cure comes at a cost of high levels of government surveillance over the public as it tries to make sure the complicated tax, welfare and payments system pays the correct amount to each recipient.

''The overwhelming majority of people are honest in their dealings with the government,'' Human Services Minister Kim Carr says.

''But responsible custodianship of this money through an effective compliance program means help goes where it should - to those most in need.''

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The Department of Human Services administers the payments made through Centrelink, Medicare and other agencies, including family tax benefits, the baby bonus, disability and aged pensions and benefits paid to the unemployed and single parents.

It is responsible for the administration of two-fifths of the entire budget each year through 800 million transactions worth $144.7 billion.

For the first time the department has detailed all the compliance methods it uses to monitor payments.

For example, 122,000 phone calls were made between July and November this year to check on people's financial circumstances.

In the previous financial year the department also contacted 16,300 families about family tax benefit payments, 12,000 older people about their investments, found 43,000 students who were earning more than their study assistance payments allowed and identified 32,000 people receiving the disability support payment who were either being paid the wrong amount or were claiming more money than they should.

About 91,000 tipoffs from the public were received about people believed to be making wrongful claims.

Only 377 people - down from the previous year's 588 - were placed under what the department calls ''optical surveillance'', a euphemism for private detectives employed by the government to check on people's work and relationship status - most often in cases of alleged fraud for welfare and child support payments.

Compliance methods employed by the department enabled it to recover $1.1 billion from people the previous financial year compared with $1.09 billion the year before.

WELFARE CHECKS

- 122,000 phone calls made to check people’s circumstances - 377 people under surveillance by private detectives - 1288 people referred to the Commonwealth Director of Public Prosecutions for welfare fraud - Department of Human Services is responsible for two fifths of the Commonwealth's budget - The department administers 800 million transactions such as Medicare and family tax payments each year SOURCE: DEPARTMENT OF HUMAN SERVICES, 2012